The Millennial Generation is typically defined as anyone who was born after 1980 or anyone who reached young adulthood around 2000 — after the development of the World Wide Web.
This generation’s defining characteristic is the influence technology has had on shaping their lives. This generation represented one-third of the U.S population in 2013 and it represents about 45 percent of the New Home Source Home Shopper Insights Panel. With all of the hype, hipsters and technological development surrounding Millennials, we wanted to know if and how the way Millennials approach home shopping differs from previous generations.
To shed light on this issue we filtered data from five surveys we’ve fielded to our panel and pulled the most interesting insights.
How do Millennials Shop for Homes?
The easy answer is online. National real estate websites and online search engines rank No. 1 and No. 2, respectively, when asked “Which sources do you use in your search for a home?”
This may seem obvious, but the frequency of online search engines, at 46 percent, makes a strong case for real estate professionals to invest in SEO-type solutions to maximize their presence on the web — especially if their inventory is appealing to Millennial home shoppers.
Millennials prioritize the opinions of their friends and family to a much higher degree than other generations.
When asked where they recalled hearing information about homes and real estate, Millennial’s top answers were:
- Friends and Family – 45 percent,
- Roadside Signs – 41 percent and
- Online Advertisements – 39 percent.
Overall, Millennials appear 11 percent more likely to recall information about homes from friends and family members than other generations. Though the Internet is certainly the first information stop for the homebuying Millennial, they appear to recall more traditional forms of advertisement before citing online sources.
This aligns with key Millennial homebuying actions, where panelists reported their top actions toward home purchase as:
- Driving around neighborhoods looking at homes – 56 percent,
- Regularly looking at home listings online – 55 percent and
- Calculating living costs as a result of new-home purchase – 49 percent.
In terms of real estate professionals, panel data indicates that Millennials value agents most for their guidance through the purchase process and their price negotiation expertise.
For agents in areas likely to draw Millennial home shoppers, talking about the quality of guidance or a reputation as an effective negotiator may attract more young home shoppers.
Social media is a huge piece of the Millennial lifestyle. Eighty percent of panel Millennials reported spending more than 30 minutes of their time on social media every day, 10 percent higher than other generations. For Millennials, 75 percent of that time is spent on Facebook, 8 percent on Twitter and 5 percent on Instagram.
But does this dedicated time spent consuming peers’ cat pictures and reading click-bait also include home shopping? Yes. Millennials are 20 percent more likely to find social media sites useful to their home shopping process than other generations. However, social media is used more often as an abstract tool to gather ideas around what they seek in an ideal home and then to share those ideas with their social network.
Surprisingly, Instagram is absent from the home shopping social media list for Millennials, which is a platform that offers a continuous pictorial feed and groups relevant images by ‘hashtags’ (ex: #homeshopping). Because of the quality of images produced by the realty and homebuilding industries, Instagram may provide a new effective platform for generating brand interest and awareness in Millennials.
Millennials also indicated being 10 percent more tolerant of advertising on social media, meaning that social media outreach efforts by real estate professionals could prove more effective with a younger home shopping audience.
What do Millennials Value in a Home?
When seeking out a new home location, Millennials ranked these as their top five most important factors when assessing location quality:
- Proximity to everyday conveniences,
- Public School Performance,
- Proximity to Major Highways,
- Proximity to work or major employment and
- Presence of Similar People.
Price and location aside, the top five important factors for home shopping Millennials were:
- Floor Plan/ Layout,
- Financing Options,
- Durability and Quality of Materials,
- School Quality and
- Standard Features or Upgrades Available.
Overall, Millennials valued home financing options 13 percent more than other generations. Millennials also valued the availability of standard features and upgrades 10 percent more than other generations.
Fact 14 of the U.S Council of Economic Advisers report on Millennials states “Millennials are less likely to be homeowners than young adults in previous generations.” Evidence shows that by entering adulthood during the Great Recession and Recovery strongly effected Millennial housing and household formation patterns. Many Millennials opt to live at home with their parents rather than pursue homeownership or rent with friends — again, the Millennials have strong ties to their social network. Other reasons given from the report include a strict lending environment, student loan debt, flexibility of renting property and challenges Millennials face in the labor market.
Millennial home shoppers cite customization as one of the most motivating factors in new home purchase. However, though confident in discovering the ideal home for them, Millennials inexperience with the home shopping process makes real estate professionals valuable assets to Millennial home buyers. Millennials are 14 percent more likely to need guidance through the home shopping process than previous generations.
Although they can find the attributes, traits and customizable features for their dream home, and these features can bring Millennial buyers into communities, it is the guidance, patience, and confidence that real estate agents can demonstrate in the process that will ultimately seal the deal.